It was financed in a number of ways. Extortion/theft? Yes, namely with "confiscation laws" allowing property siezure and sale for supporting the crown. I speak more to some of the impacts loyalist faced from that [here] (https://www.reddit.com/r/AskHistorians/comments/gtgfll/what_happened_to_prominent_americans_who_sided/), saying;

...states began to pass Bills of Attainder. This type of law essentially allows assumption of guilt and exercise of punishment without trial and these particular ones dealt with confiscation of property. One South Carolina version included provisions for anyone congratulating Cornwallis on victories or even just for being "obnoxious." Anyone who offered support to the crown even just verbally ran the risk of losing property or, as many early confiscation laws permitted, being banished from their home colony/state. Many, including William Franklin (Ben Franklin's son and the Governor of New Jersey), were banished forever from the states they worked to improve. These laws were actually permitted by Congress and worked as a revenue stream for the states.

Throughout the South the loyalists and patriots kept engaging, often in something more akin to roving gangs than military factions. Often "battles" took place at estates. In Virginia in 1780 Capt Charles Lynch would begin to "arrest" believed local loyalists, have summary trials for them, then sentence them to whippings or lashings, property confiscation, or forced oaths of American allegiance. This became known as "Lynch Law" and is the origin of the term "lynching" which means to be punished on assumpton of guilt without due process.

Foreign money was huge as well, starting with funds covertly sent through a front company in France started by the playwright that authored Le Barbier de Séville (I speak more about Franklin, Deane, and Lee getting Vergennes and the French involved in this [post] (https://www.reddit.com/r/AskHistorians/comments/gj17ga/how_did_ben_franklin_get_the_french_monarchy_and/) ).

Another major source of funding was the wealth and actions of Robert Morris. His home in Philidelphia, for instance, was made available and served as Washington's presidential home. He was instrumental in creating our economy and funding our early union. A good bio on Morris is Robert Morris: Financier of the American Revolution, by Charles Rappleye.

A great resource for loyalists is Liberty's Exiles: American Loyalists in the Revolutionary World, by Maya Jasanoff. Another that deals with many of the abuses faced by them (as well as "war crimes" committed by both sides) is Scars of Independence: America's Violent Birth, by Holger Hoock.

Any good book on the war and original founding should have at least a little on funding as well. One such book is The American Revolution, by Colin Bonwick (though it covers more than just economics).

Edit to add: Any good Franklin bio will include the French meetings. My go-to Franklin book is The First American: The Life and Times of Benjamin Franklin by HW Brands (it is the sole source used for my post related to that topic linked above).